When it comes to buying a home, there are many factors to consider before signing on the dotted line. One important aspect of the home buying process is the inclusion of contingencies in the purchase agreement. Contingencies are conditions that must be met before the sale can be completed and the home can change hands. Here, we`ll take a closer look at home purchase agreement contingencies and what you need to know about them.
Financing Contingency
One of the most common contingencies in a home purchase agreement is a financing contingency. This contingency states that the sale is contingent on the buyer securing financing for the home purchase. This is an important contingency because if the buyer is unable to obtain financing, they will not be able to complete the purchase.
Inspection Contingency
Another common contingency is an inspection contingency. This contingency allows the buyer to have the home inspected by a professional home inspector to identify any issues or repairs that need to be addressed before the sale can be completed. If any major issues are found during the inspection, the buyer has the option to back out of the sale or negotiate with the seller to have the issues addressed.
Appraisal Contingency
An appraisal contingency is another common contingency in a home purchase agreement. This contingency states that the sale is contingent on the home`s appraisal value meeting or exceeding the agreed-upon purchase price. If the home`s appraisal value comes in lower than the purchase price, the buyer may choose to back out of the sale or negotiate with the seller to lower the purchase price.
Title Contingency
A title contingency is a contingency that ensures the home`s title is clear and free of any liens or ownership disputes. This contingency protects the buyer from purchasing a home with a clouded title, which could result in legal issues down the line.
Final Thoughts
Home purchase agreement contingencies are an essential part of the home buying process. They protect both the buyer and the seller and ensure that the sale proceeds smoothly. As a buyer, it`s important to understand the contingencies included in your purchase agreement and to work with your real estate agent to negotiate any necessary changes to the agreement. This way, you can feel confident that you`re making a sound investment in your new home.